Interim Results and Directorate Change
RDF Group PLC
("RDF" or "the Group")
Interim Results and Directorate Change
RDF Group plc (AIM: RFG), the I.T. services group, with offices in Brighton,
Bristol, Edinburgh and London, today announces its unaudited interim results
for the six months to 30 September 2008.
Key Points
* Revenue increased 8.4% to £15.975m (2007: £14.735m)
* Operating profit, before aborted sale costs, is £0.402m (2007: £0.136m)
* Operating profit is £0.348m (2007: £0.136m)
* Profit for the period attributable to the equity shareholders of the parent
company is £0.157m (2007: £0.020m)
* Earnings per share 1.51p (2007: 0.19p)
* Cash generated from operations is £0.830m (2007: Cash utilised by
operations £0.717m)
* Net assets per share are 23.13p (2007: 22.32p)
* Managed Services division returned to profit, contributing £0.222m (2007:
loss £0.541m) with strong growth in revenues: £6.887m (2007: £4.507m)
In addition, RDF announces that Jim Carr, Chairman, has resigned from the board
of directors with effect from today. Robert Weir, who joined the board as a
non-executive director in August 2008, will take over the role as Chairman with
immediate effect. The board extends its best wishes to Mr Carr for the future
and wishes to record its thanks for his contribution to the company.
For further information, please contact:
RDF Group plc David Wood 01273 200100
Smith & Williamson Corporate Azhic Basirov/Siobhan 020 7131 4000
Finance Sergeant
Editor's Notes
Founded in 1994, RDF Group plc is a company specialising in IT related business
solutions for a wide range of organisations. From a standing start, the company
currently has a turnover in excess of £30 million and this has more than
trebled in the last three trading years, mainly through organic growth.
RDF is divided into several areas of expertise, with two areas dominant. RDF's
Managed Services division (encompassing software development and testing
services and data management solutions) and Recruitment Services are key areas
of growth, where a strategy of long-term investment is boosting both
productivity and profits.
RDF Group is very proud to include Northern Rock, Visa, American Express,
National Australia Group and Sky TV amongst their clients as well as a range of
other blue chip and smaller companies who share the same goals - to achieve
quality IT solutions that are effective, on time and on budget. Headquartered
in Brighton and with four offices throughout the UK, including Bristol,
Livingston and London.
For further information on the Group, visit www.rdfgroup.com or telephone 01273
200100.
Chairman's Statement
Introduction
I am pleased to present the results for RDF Group plc ("the Group") for the six
months to 30 September 2008. This will be my final statement on behalf of the
Group as I will be resigning from the board with effect from today. Having been
involved with the Company since its introduction to AIM in 1999 and having
personally supported the initial share offering I remain a shareholder of the
Company as I retire and I wish the Company every good fortune for the future.
Robert Weir will take over the role of Chairman.
The first half of the current financial year has seen a return to profitability
for the Group as a whole, with growing demand in the Managed Services business.
Results
Total revenue for the period is £15.975m (2007: £14.735m). The Managed Services
division has seen an increase in turnover of 53% over the same period last
year, to achieve sales of £6.887m for the period (2007: £4.507m). There has
been a slowing in demand for Recruitment Services, largely driven by
uncertainty over staffing levels as a result of the credit crunch. This
resulted in a small reduction in sales in this division to £9.088m (2007: £
10.228m). Operating profit, before aborted sale costs, is £0.402m (2007: £
0.136m) and operating profit, after aborted sale costs, is £0.348m (2007: £
0.136m). As a result, the earnings per share have increased to 1.51p (2007:
0.19p).
Strategic Developments
During the last quarter of 2007-8, the Board reviewed the current strategy of
the Group's investment in both its Managed Services and Recruitment divisions.
As a result of this review, the Board concluded that its Managed Services
division should be sold, subject to achieving an acceptable price. As announced
to the market in September, the Board decided to suspend the sale process due
to the current economic climate and has continued with its plans to turn the
division around. This strategy has been effective and it is now contributing to
the Group's profitability.
Outlook
In the prevailing economic climate, all companies face new and unusual
challenges and the Group is no different. There continues to be downward
pressure on margins in the Recruitment Services business and the Group's
management is redoubling its efforts to increase sales volumes in this area.
The Managed Services division has a strong prospect pipeline, some exciting new
opportunities and a strong baseline set of contracts with established
companies. Your Board is confident that the Group has the product set, business
agility and financial support to deliver continued operating profitability in
the second half of this year.
Jim Carr
Chairman
3 December 2008
Consolidated Income Statement
(unaudited)
6 months 6 months 12 months
to to 30 to
30 Sept Sept 31 March
2008 2007 2008
Note £000 £000 £000
Revenue 3 15,975 14,735 30,489
Cost of sales 13,828 12,665 26,272
Gross profit 2,147 2,070 4,217
Administrative expenses 1,745 1,934 4,055
Operating profit before aborted sale 402 136 162
costs
Aborted sale costs 4 (54) - -
Operating profit 348 136 162
Finance cost (91) (93) (204)
Finance income 1 1 2
Profit/(loss) on ordinary activities 258 44 (40)
before taxation
Income tax expense 5 (101) (24) (29)
Profit/(loss) for the period 157 20 (69)
attributable to equity shareholders of
the parent company
Earnings / (loss) per Share 6
Basic 1.51p 0.19p - 0.66p
Diluted 1.51p 0.18p - 0.64p
The operating profit for the period arises from the Group's continuing operations.
Consolidated Balance Sheet
(unaudited)
As at As at As at
30 Sept 30 Sept 31 March
2008 2007 2008
£000 £000 £000
ASSETS
NON CURRENT ASSETS
Goodwill 538 538 538
Other intangible assets 174 377 192
Property, plant and equipment 359 491 400
Deferred tax asset - - 13
1,071 1,406 1,143
CURRENT ASSETS
Trade and other receivables 6,099 6,208 6,441
Cash and cash equivalents 28 40 100
6,127 6,248 6,541
TOTAL ASSETS 7,198 7,654 7,684
EQUITY
Share capital 208 208 208
Share premium account 103 103 103
Equity options reserve 135 119 121
Retained earnings 1,959 1,891 1,802
TOTAL EQUITY ATTRIBUTABLE TO EQUITY 2,405 2,321 2,234
SHAREHOLDERS OF THE PARENT COMPANY
LIABILITIES
Other non-current liabilities
Borrowings - 40 32
Deferred tax liabilities 70 91 88
70 131 120
CURRENT LIABILITIES
Trade and other payables 2,911 2,744 2,857
Current income tax liabilities 142 344 12
Borrowings 1,670 2,114 2,461
4,723 5,202 5,330
TOTAL LIABILITIES 4,793 5,333 5,450
TOTAL LIABILITIES AND EQUITY 7,198 7,654 7,684
Consolidated Statement of Changes in Shareholders' Equity
(unaudited)
Attributable to the equity shareholders of the parent company
Share Share Equity Retained Total
capital premium option earnings
reserve
£000 £000 £000 £000 £000
At 1 April 2007 208 103 101 2,001 2,413
Profit for the financial - - - 20 20
period
Dividends paid - - - (130) (130)
Total recognised income and (110) (110)
expense
Share based payment expense - - 18 - 18
At 1 October 2007 208 103 119 1,891 2,321
Loss for the financial - - - (89) (89)
period
Dividends paid - - - - -
Total recognised income and (89) (89)
expense
Share based payment expense - - 2 - 2
At 1 April 2008 208 103 121 1,802 2,234
Profit for the financial - - - 157 157
period
Dividends paid - - - - -
Total recognised income and 157 157
expense
Share based payment expense - - 14 - 14
At 30 September 2008 208 103 135 1,959 2,405
All of the above are attributable to the equity shareholders of the Company.
Consolidated Cash Flow Statement
(unaudited)
Note 6 months 6 months 12 months
to to 30 to
30 Sept Sept 31 March
2008 2007 2008
£000 £000 £000
Cash Flows From Operating Activities
Cash generated / (utilised by) from 8 830 (717) (534)
operations
Net interest paid (90) (92) (202)
Income tax received / (paid) 22 (2) (357)
Net cash from /(used in) operating 766 (811) (1,093)
activities
Cash Flows From Investing Activities
Purchase of property, plant and equipment (12) (140) (139)
Proceeds from the sale of property, plant - - 3
and equipment
Net cash flow used in investing activities (12) (140) (136)
Cash Flows from Financing Activities
Repayment of finance leases (5) (4) (9)
Equity dividends paid - (130) (130)
Net cash flow used in financing activities (5) (134) (139)
Increase / (decrease) in cash and cash 745 (1,085) (1,368)
equivalents for the period
Cash and cash equivalents at the beginning (2,350) (982) (982)
of the period
Cash and cash equivalents at the end of the (1,605) (2,067) (2,350)
period
Cash and cash equivalents 28 40 100
Bank overdrafts and invoice discounting (1,633) (2,107) (2,450)
facilities
(1,605) (2,067) (2,350)
Notes to the interim report
(unaudited)
1 Authorisation of Interim Financial Statements
The Group's interim financial statements for the period ended 30 September 2008
were authorised for issue by the Board of Directors on 3 December 2008. RDF
Group PLC is a public limited company, incorporated and domiciled in England
and Wales and its ordinary shares are traded on the London Stock Exchange's
AIM.
The comparative financial information for the year ended 31 March 2007 has been
extracted from the published financial statements of RDF Group PLC. The
consolidated interim financial information does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. These
interim results are unaudited and have not been reviewed by the Group's
auditor. The statutory accounts for the year ended 31 March 2008 have been
reported on by the Group's auditor and delivered to the registrar of companies.
The report of the auditor was unqualified and did not contain the statements
under section 237(2) or (3) of the Companies Act 1985.
Further copies of the Interim Report may be obtained from RDF Group PLC's
registered office at 2 Bartholomews, Brighton, BN1 1HG.
2 Basis of preparation
RDF Group PLC prepares its Annual Report and Accounts on the basis of IFRS as
adopted for use by the EU. The financial information presented in this Interim
Report has been prepared in accordance with the accounting policies expected to
be used in preparing the 2009 Annual Report and Accounts which do not differ
significantly from those used in the preparation of the 2008 Annual Report and
Accounts.
Certain prior period amounts have been reclassified to conform to the 2008
presentation.
The interim financial statements are presented in sterling and have all values
are rounded to the nearest thousand pounds (£000) except when otherwise
indicated.
3 Segmental Reporting
Primary Business Segment
Segmental information is presented in respect of the Group's business segments.
The primary business segments are based on the Group's reporting structures.
Segmental results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise
mainly corporate and head office items. All the Group's sales are in the United
Kingdom.
6 months ended 30 September 2008 Managed Recruitment Unallocated Total
Services Services Group
£000 £000 £000 £000
Revenue 6,887 9,088 - 15,975
Sales to external customers
Results 222 346 (148) 420
Operating profit before aborted sale
costs and amortisation of intangible
assets
Aborted sale costs - - (54) (54)
Amortisation of intangible assets - (18) - (18)
Profit before interest and tax 222 328 (202) 348
Net finance expense (90)
Profit before tax 258
Taxation (101)
Profit after taxation 157
6 months ended 30 September 2007 Managed Recruitment Unallocated Total
Services Services Group
£000 £000 £000 £000
Revenue 4,507 10,228 - 14,735
Sales to external customers
Results (466) 902 (189) 247
Operating profit before exceptional
items and amortisation of intangible
assets
Amortisation of intangible assets (75) (36) - (111)
Profit before interest and tax (541) 866 (189) 136
Net finance expense (92)
Profit before tax 44
Taxation (24)
Profit after taxation 20
Year ended 31 March 2008 Managed Recruitment Unallocated Total
Services Services Group
£000 £000 £000 £000
Revenue 10,426 20,063 - 30,489
Sales to external customers
Results 5 1,340 (377) 968
Operating profit before exceptional
items and amortisation of intangible
assets
Exceptional items (510) - - (510)
Amortisation of intangible assets (149) (72) - (221)
Exceptional amortisation of (75) - - (75)
intangible assets
Profit before interest and tax (729) 1,268 (377) 162
Net finance expense (202)
Loss before tax (40)
Taxation (29)
Loss after taxation (69)
4 Aborted Sale Costs
During the period the Group incurred costs in relation to the proposed sale of
its Managed Services Division which was suspended during the period. The Board
believes that highlighting these items provides a better understanding of the
Group's underlying performance in this period.
5 Taxation
6 months 6 months 12 months
to to to
30 Sept 30 Sept 31 March
2008 2007 2008
£000 £000 £000
Current Tax Expense
UK Corporation tax 106 9 55
Adjustment in respect of prior years 1 1 (35)
Total current tax 107 10 20
Deferred Tax
Origination and reversal of timing differences (6) 14 -
Adjustment in respect of prior years 9
Total taxation in income statement 101 24 29
Reconciliation of Effective Tax Rate
The tax assessed for the year is higher (2007: higher) than the standard rate
of corporation tax in the UK of 28% (2007: 30%). The differences are explained
below:
6 months 6 months 12 months
to to to
30 Sept 30 Sept 31 March
2008 2007 2008
£000 £000 £000
Profit / (loss) on ordinary activities before 258 44 (40)
taxation
Profit / (loss) on ordinary activities multiplied by 72 13 (12)
the standard rate of tax
Expenses not deductible for tax purpose 33 31 70
Depreciation for period in excess of capital 6 6 -
allowances
IFRS2 Share based payment expense 4 6
Origination and reversal of timing differences - 14 10
Other adjustments (15) (41) (10)
Adjustment in respect of prior years 1 1 (35)
Total tax expense 101 24 29
Effective tax rate 39.1% 54.6% -72.5%
6 Earnings Per Share
Earnings per Ordinary
Share:
6 months 6 months 12 months
to to to
30 Sept 30 Sept 31 March
2008 2007 2008
pence pence pence
- basic 1.51 0.19 - 0.66
- diluted 1.51 0.18 - 0.64
The basic earnings per share amounting to 1.51 pence (September 2007: 0.19
pence; March 2008: -0.66 pence) for the year have been calculated on a profit
of £157,000 (September 2007: £20,000; March 2008: loss £69.000) being the
consolidated profit on ordinary activities after taxation attributable to
members of the company for the 6 months ended 30 September 2008, and are based
on the weighted average number of Ordinary Shares in issue of 10,400,000
(September 2007: 10,400,000; March 2008: 10,400,000).
The fully diluted earnings per share amounting to 1.51pence (September 2007:
0.18 pence; March 2008: -0.64 pence) for the year have been calculated on the
basis of adding 0 shares (September 2007: 382,508; March 2008: 320,950) to the
weighted average number of shares in issue, to take account of the dilutive
effect of the outstanding share options to give 10,400,000 (September 2007:
10,782,508; March 2008: 10,720,950) shares being in issue, assuming that all
options are exercised.
7 Dividends
The following dividends have been paid in respect of the year:
6 months 6 months 12 months
to to to
30 Sept 30 Sept 31 March
2008 2007 2008
£000 £000 £000
Interim 2007-8 0.00 pence per share (2006-7 - - 104
1.00 pence per share)
Final 2006-7 1.25 pence per share (2005-6 1.00 - 130 104
pence per share)
Dividend paid on Ordinary Shares - 130 208
The directors are recommending a final dividend of 0.75p per Ordinary Share in
respect of the year totalling £78,000 (2007 - 1.25p per Ordinary Share
totalling £130,000). If approved at the reconvened Annual General Meeting, the
dividend will be paid to shareholders on the register at 5 September 2008.
8 Reconciliation of Profit Before Tax to Net Cash Flow from Operations
6 months 6 months 12 months
to to to
30 Sept 30 Sept 31 March
2008 2007 2008
£000 £000 £000
Operating profit 258 44 (40)
Finance cost 91 93 204
Finance income (1) (1) (2)
Depreciation of property, plant and equipment 52 89 177
Amortisation of intangible assets 18 111 296
Share based payment expense 14 18 20
Operating cash flows before movements in 432 354 655
working capital
Increase /(decrease) in receivables 344 (921) (1,152)
Decrease /(increase) in payables 54 (150) (37)
Cash generated / (utilised by) from operation 830 (717) (534)
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